SINGAPORE, Apr 22: London copper retreated towards 18-month lows below $7,000 a tonne on Monday, as worries about sluggish global growth eroded investors’ appetite for metals, although traders expect prices should soon reach a bottom.
Three-month copper on the London Metal Exchange fell 1 percent to $6,920 a tonne by 0308 GMT, extending losses from the previous session.
LME copper hit its weakest in a year-and-a-half at $6,800 a tonne on Thursday and closed the week down more than 5 percent, its biggest weekly fall in more than one year.
The most-traded August copper contract on the Shanghai Futures Exchange broke below 50,000 yuan ($8,100) a tonne, back towards Friday’s near three-year low of 49,750, before cutting losses to 50,040, still down 0.85 percent.
‘We can see further downside in copper near term, given we’ve had inventories at multi-year highs and amid concerns of a housing bubble and slowing growth in China, and that perhaps the data is not showing how bad the economy is,’ said Tim Radford, a global analyst at Sydney-based advisor Rivkin.
Still, expectations a recovery in Europe and the United States will gain steam, plus the potential that policies from China’s new leadership could spark fresh consumer demand suggests further weakness could present a buying opportunity, he said.
Rivkin sees buying support for copper at around $3 a pound ($6,610 a tonne).
In a sign of worries over a sluggish global recovery, finance leaders of the G20 economies on Friday edged away from a long-running drive toward government austerity in rich nations, rejecting the idea of setting hard targets for reducing national debt.
Also reflecting a harsher outlook for the industry, United Company RUSAL Plc revised on Monday its 2012 net loss to $337 million from the $55 million it previously stated, citing adjustments from mining giant Norilsk Nickel in which it owns a stake.
Nickel prices have come under pressure from limp stainless steel demand, which pushed LME inventories to record highs last week <MNI-STOCKS>, and toppled prices to 3-1/2-year lows at $15,155 a tonne on Monday.
After selling off sharply earlier last week, commodity markets closed the week on a slightly firmer footing. But some were not convinced about the sustainability of the recovery.
‘We have our doubts whether this rebound can continue much further in the absence of good economic data. In this context, US economic numbers including Q1 GDP data will be watched very closely this week,’ Credit Suisse said in a research note.
INVESTOR POSITIONING
In evidence copper prices may be finding a bottom, hedge funds and other big speculators trimmed their net short positions in copper, latest data showed.
‘(Prices) will fluctuate around $6,800-$7,200 for a while. Maybe we can see copper fall to $6,600 but it will bounce back to the range quickly,’ a Hong Kong-based broker said.
Chinese importers of refined copper have rushed to buy the metal from bonded warehouses in Shanghai following a near 6 percent fall in LME prices last week.
Spot premiums for metal in bonded warehouses in Shanghai rose to new 16-month highs of $120-$140 according to Chinese price provider Shmet, and $120-$135 according to price provider SMM, up from $115-$135 per tonne on Friday.
(AGENCIES)
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